Oriola Corporation’s Interim Report January–March 2023
Oriola Corporation Stock Exchange Release 27 April 2023 at 8.30 a.m. EEST
Oriola Corporation’s Interim Report January–March 2023
Solid first quarter – stable net sales in constant currency, profitability in line with our expectations
January–March 2023 highlights
- Invoicing decreased by 3.2% to EUR 858.3 (886.7) million. On a constant currency basis, invoicing increased by 1.1% and was EUR 896.7 million.
- Net sales decreased by 4.8% to EUR 354.7 (372.7) million. On a constant currency basis, net sales decreased by 0.6% and were EUR 370.5 million.
- Adjusted EBIT was EUR 3.5 (4.7) million. On a constant currency basis, the adjusted EBIT was EUR 3.7 million.
- EBIT was EUR 3.5 (3.3) million and included adjusting items of EUR -0.0 (-1.4) million. On a constant currency basis, EBIT was EUR 3.7 million.
- Profit for the period totalled EUR 1.1 (2.1) million and earnings per share were EUR 0.01 (0.01).
- Change in reporting of Oriola’s share of the net result of Swedish Pharmacy Holding: Previously, Oriola’s share of the net result was reported above the EBIT line, but starting from the first quarter of 2023, Oriola will report it under the EBIT line in the consolidated statement of comprehensive income. Outlook for 2023 has been updated according to the change in reporting.
| Key figures | 2023 | 2022 | Change | 20221 |
| EUR million | 1-3 | 1-3 | % | 1-12 |
| Invoicing | 858.3 | 886.7 | -3.2 | 3,568.0 |
| Net sales | 354.7 | 372.7 | -4.8 | 1,515.5 |
| Adjusted EBIT2 | 3.5 | 4.7 | -24.9 | 19.7 |
| EBIT | 3.5 | 3.3 | 6.6 | 9.5 |
| Adjusted EBIT % | 1.0 | 1.3 | 1.3 | |
| EBIT % | 1.0 | 0.9 | 0.6 | |
| Profit for the period | 1.1 | 2.1 | -47.8 | 4.8 |
| Earnings per share, EUR, continuing operations | 0.01 | 0.01 | -47.8 | 0.03 |
| Earnings per share, EUR, discontinued operations | - | 0.04 | -0.04 | |
| Net cash flow from operating activities3 | -42.6 | 28.7 | 77.9 | |
| Gearing, % | 8.7 | 8.3 | -10.5 | |
| Equity ratio, % | 22.8 | 19.1 | 23.8 | |
| Return on capital employed (ROCE), % | 4.0 | 2.8 | 2.4 |
1 Year 2022 Adjusted EBIT and EBIT have been restated and exclude the share of result in joint venture.
2 Adjusting items are specified in note Adjusting items.
3 Comparative figures include continuing and discontinued operations.
In order to reflect the underlying business performance and to enhance comparability between financial periods, Oriola discloses certain performance measures of historical performance, financial position and cash flows, as permitted in the “Alternative performance measures” guidance issued by the European Securities and Markets Authority (ESMA). These measures should not be considered as a substitute for measures of performance in accordance with the IFRS. The calculation methods of these measures are provided in note Alternative performance measures in the notes to this Interim Report.
Outlook for 2023
Due to the change in reporting of Oriola’s share of the net result of Swedish Pharmacy Holding AB, Oriola has updated its outlook for 2023.
The updated outlook for 2023 (published on 27 April 2023)
Oriola expects the adjusted EBIT to remain on the same level compared to 2022.
The outlook takes into consideration the significant negative impact on Oriola’s profitability from the loss of public tenders and consequently of patients in the dose dispensing business in Sweden. The dose dispensing business in Sweden will focus on new customer segments to develop the business. Furthermore, the recent overall inflationary environment and related cost pressures may have an impact on Oriola’s profitability.
The adjusted EBIT in 2022 was EUR 19.7 million, excluding the contribution from the joint venture company Swedish Pharmacy Holding AB.
The previous outlook for 2023 (published on 16 February 2023)
Oriola expects the adjusted EBIT, excluding the contribution from the joint venture Swedish Pharmacy Holding AB, to remain on the same level compared to 2022.
The outlook takes into consideration the significant negative impact on Oriola’s profitability from the loss of public tenders and consequently of patients in the dose dispensing business in Sweden. The dose dispensing business in Sweden will focus on new customer segments to develop the business. Furthermore, the recent overall inflationary environment and related cost pressures may have an impact on Oriola’s profitability.
The adjusted EBIT in 2022 was EUR 19.7 million, excluding the contribution from the joint venture company Swedish Pharmacy Holding AB.
CEO Katarina Gabrielson:
I am pleased with the solid start to this year despite some uncertainties in our operating environment. On a constant currency basis, Oriola’s net sales in the first quarter were at last year’s level of EUR 370 million. Sales were supported by good development in the Distribution of pharmaceuticals, especially in Finland. The reduced import of parallel medicine had a negative impact on volumes in Sweden. Furthermore, towards the end of the first quarter in 2022, consumers hoarded pharmaceuticals in Sweden as a reaction to the war in Ukraine boosting sales in the comparison period.
In the first quarter, Oriola’s profitability was burdened mainly by lower volumes in the Swedish Dose dispensing business and higher transportation costs in Sweden. The overall inflationary environment has continued to be challenging, but with strict cost control we have been able to mitigate the pressure. Operating expenses were below last year’s level despite the higher transportation costs. Oriola’s adjusted EBIT for the first quarter declined to EUR 3.5 (4.7) million and was largely in line with our expectations. Despite the high fluctuation in net working capital, which is typical for our industry, our liquidity and balance sheet remained strong.
After the successful implementation of our short-term turnaround and the restructuring of our business portfolio last year, we continue with our long-term transformation of the company to achieve its full potential. Oriola has a clear strategic direction that focuses on our core business, the improvement of profitability and our societal role as an infrastructure company in securing the availability of pharmaceuticals. We want to be the preferred business partner in the Nordics, and we offer high-quality and advanced distribution of pharmaceuticals and a wide assortment of health and wellbeing products to our customers. In addition, we provide advisory services to pharmaceutical companies and pharmacies. To ensure sustainable growth and shareholder value, we are further developing our commercial and supply chain excellence while ensuring profitability, efficiency and a collaborative culture. We will also support the value creation in our joint venture company Kronans Apotek and gradually look for selective merger and acquisition targets to support our growth.
During the first quarter we have continued to strengthen our commercial operating model to create better customer understanding, improve the customer journey and generate customer value. This also included accelerating our commercial capability training and managerial change management training. In addition, one of our focus areas during the period was to continue the implementation of price increases to mitigate inflationary pressure. In our operations and supply chain we continued with efficiency improvements by simplifying processes and improving demand-planning. Another key action was the improvement of our information system security, especially our monitoring capabilities and the security of our digital service environment.
Sustainability is embedded in everything we do. We are committed to reach carbon neutrality by 2030, and by 2025 in our own operations. As a result of our long-term work to reduce our carbon footprint, we have decreased emissions in our own operations by 70% compared with the base year 2019. To continue on this path, we have ongoing improvement projects at our sites relating to, for instance, LED lighting, waste handling, heat recovery and cooling systems. In addition, we have started the renewal of our sustainability programme and to prepare for the upcoming sustainability reporting requirements. As part of this project, we have completed a gap analysis and a double-materiality assessment among our stakeholders.
Looking forward in the financial year 2023, we continue to expect Oriola’s adjusted EBIT to remain on the same level compared to last year. We expect the challenging inflationary environment to continue, and we will continue with strict cost control. I am very proud of the high motivation of our people to develop the company and the business, and I would like to take this opportunity to extend my sincerest thanks to everyone for their commitment and hard work.
Disclosure procedure
This stock exchange release is a summary of Oriola Corporation’s Interim Report January–March 2023. The complete report is attached to this release in pdf format and is also available on Oriola’s website at www.oriola.com.
Analyst and investor meeting at 10.00 a.m. EEST
Oriola’s CEO Katarina Gabrielson and CFO Timo Leinonen will present the Q1 Interim Report at a live webcast meeting today at 10.00 a.m. EEST. Please join meeting here: https://oriola.videosync.fi/q1-2023
Financial reporting in 2023
Oriola will publish financial reports in 2023 as follows:
- Friday 21 July 2023: Half Year Financial Report 1-6/2023
- Tuesday 31 October 2023: Interim Report 1-9/2023
Further information:
Timo Leinonen
CFO
email: timo.leinonen@oriola.com
Mikael Wegmüller
VP, Communications and Sustainability
email: mikael.wegmuller@oriola.com
Distribution:
Nasdaq Helsinki Ltd
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